(Bloomberg) — U.S. futures fell with European stocks at the end of a volatile week as concern about tighter policy overshadowed strong earnings from Apple Inc.
Contracts on U.S. gauges extended losses, after rising earlier in the session. Apple rose in premarket trading, while Chevron Corp. fell on disappointing profits. Losses in tech and auto shares dragged on European benchmarks.
A dollar gauge ticked up, while Treasuries slipped. A measure of credit risk for European junk bonds climbed to the highest level since November 2020.
Markets have been whiplashed by volatility this week as the Federal Reserve signaled aggressive tightening, adding to investor concerns about geopolitical tensions and an uneven earnings season. Also sapping sentiment on Friday were weak data on the German economy and euro-area confidence.
As investors brace for rising rates, rotating out of frothier equities, value stocks are outperforming.
Money markets are now pricing in nearly five Fed hikes this year after a hawkish stance from Chair Jerome Powell. That’s up from three expected as recently as December.
“Tighter liquidity and weaker growth mean higher volatility,” Barclays Plc strategists led by Emmanuel Cau wrote in a note. The “current growth scare looks like a classic mid-cycle phase to us, while a lot of hawkishness is priced in.”
The U.S. stock market is priced “quite aggressively” versus other developed nations as well as emerging markets, and valuations in the latter can be a tailwind rather than a headwind as in the U.S., Feifei Li, partner and CIO of equity strategies at Research Affiliates, said on Bloomberg Television.
Perpetual Loser Europe Looks a Safer Bet in Global Equity Rout
Elsewhere, oil headed for a sixth weekly advance and gold nursed losses. Bitcoin held above $36,000.
Robinhood Markets Inc. tumbled after the retail brokerage posted worse-than-expected revenue and losses.
A gauge of Asia-Pacific shares rose for the first day in six as gains in Japan offset declines in China.
What to watch this week:
- U.S. consumer income, University of Michigan consumer sentiment Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.8% as of 7:35 a.m. New York time
- Futures on the Nasdaq 100 fell 0.4%
- Futures on the Dow Jones Industrial Average fell 0.9%
- The Stoxx Europe 600 fell 1.8%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $1.1140
- The British pound was little changed at $1.3382
- The Japanese yen fell 0.2% to 115.62 per dollar
Bonds
- The yield on 10-year Treasuries advanced four basis points to 1.84%
- Germany’s 10-year yield advanced four basis points to -0.02%
- Britain’s 10-year yield advanced five basis points to 1.27%
Commodities
- West Texas Intermediate crude rose 0.9% to $87.35 a barrel
- Gold futures fell 0.4% to $1,788.70 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
